Opinion
As Modified Feb. 18, 1988.
Review Granted April 7, 1988.
Previously published at 197 Cal.App.3d 1189 Michael L. Pickering and Jerrald K. Pickering, Redding, for petitioners and appellants.
John K. Van de Kamp, Atty. Gen., Jana L. Tuton, Deputy Atty. Gen., for respondent.
SPARKS, Associate Justice.
The question in this appeal is whether a licensed swimming pool contractor's failure to honor a 10-year express written warranty to repair defective material or installation constitutes grounds for discipline under Business & Professions Code sections 7107 or 7113. The first section prohibits the abandonment of a construction project without legal excuse while the second condemns the failure to complete a construction project for the contract price. We hold that failure to honor such a warranty does not constitute grounds for discipline under either section. In our view, the elastic definition which the Registrar of Contractors would give to the language of those two code sections in order to include dishonoring of a warranty within their ambits cannot be sustained. We thus reverse the judgment below with directions to the trial court to issue the requested writ of mandate.
FACTS
The facts necessary for understanding of this appeal are brief. Appellant Viking Pools is a licensed swimming pool contractor. In August 1977, it entered into a contract with Mr. and Mrs. Ostrom for the installation of a fiberglass swimming pool. The contract price was $5,038.02. Included in the contract was a warranty stating, "Providing VIKING has installed the pool, VIKING warrants to repair or replace defective material or installation thereof for a period of 10 years from the date hereof, when VIKING in its sole discretion determines [it] is a result of any defects in material or labor. This does not extend to pump and filter." The installation was completed, as contracted, before the end of August and the Ostroms paid Viking Pools in full. Despite conscientious maintenance of the pool, in 1980 the Ostroms noticed brown spots appearing on the surface of Mr. Ostrom apparently then contacted the Contractor's State License Board, whose assistant regional director filed an accusation against Viking Pools, Inc., AKS Construction, and Viking Pools of Redding, Inc., all of which were license-holding construction companies in which Alan Stahl was responsible managing officer or owner (and which for purposes of convenience we refer to collectively as Viking Pools). The pertinent allegations read: "5. Respondent Viking Pools, Inc., has subjected its license to discipline under ... section 7107 in that it abandoned its express written warranty on the Ostrom project, without legal excuse, by failing and refusing to correct the defective condition in accordance with the terms and conditions of the warranty. [p] 6. Respondent Viking Pools, Inc., has subjected its license to discipline under ... section 7113 in that it failed in a material respect to complete the Ostrom project for the contract price and the owners will be required to spend substantially in excess of the contract price to correct the defective condition and thereby complete the project in accordance with the contract." The administrative law judge sustained the accusation following a hearing, and her decision was adopted by the Registrar of Contractors. Viking Pools' license was ordered revoked, the revocation stayed and probation imposed for three years upon various terms and conditions. One of those terms was that Viking Pools submit proof that it made restitution of $5,000 to the Ostroms.
Contracts to construct swimming pools are subject to extensive statutory regulation. (See Bus. & Prof.Code, § 7165 et seq.) This statutory scheme contemplates that some disputes between the contracting party and the swimming pool contractor arising out the contract will be resolved by an action at law between the parties. Section 7169, for instance, provides that in such an action "the court shall award reasonable attorney's fees to the prevailing party."
Viking Pools then petitioned for a writ of administrative mandamus (Code.Civ.Proc., § 1094.5) to overturn the decision by the Registrar. The trial court denied relief, finding the actions of Viking Pools to be covered by sections 7107 and 7113. The court concluded that "a breach of an express warranty does violate Business & Professions Code Section 7107, that [Viking Pools] made an express ten (10) year warranty in its contract with the homeowners, and that [Viking Pools] breached that warranty by failing to replace or repair the defects in the fiberglass pool." It further found that Viking Pools' "conduct constituted a violation of Business and Professions Code section 7113." A request for a statement of decision was denied as untimely. This appeal followed.
On appeal Viking Pools argues that discipline under these code sections cannot be grounded on a breach of warranty. Although Viking Pools raises additional issues, we find this issue determinative and therefore do not reach the remaining issues.
DISCUSSION
As we recently noted in Linda Jones General Builder v. State License Board (1987) 194 Cal.App.3d 1320, 240 Cal.Rptr. 180. "Section 7000 et seq. constitute the Contractors License Law. (§ 7000.) These provisions govern the licensing requirements for and disciplinary actions against contractors. The causes for discipline are contained in sections 7107 and 7123. [p] The disciplinary proceedings are subject to the Administrative Procedure Act. The proceeding must be initiated by an accusation which 'specif[ies] the statutes and rules which the respondent is alleged to have violated....' Disciplinary action can be founded only upon charges made in the accusation." ( Id., at p. 1324, 240 Cal.Rptr. 180; citations and fn. omitted.)
The procedural safeguard mandated by the Administrative Procedure Act, we We begin where we end, with the statutes themselves. Business and Professions Code section 7107 provides: "Abandonment without legal excuse of any construction project or operation engaged in or undertaken by the licensee as a contractor constitutes a cause for disciplinary action." Section 7113 of that code reads: "Failure in a material respect on the part of a licensee to complete any construction project or operation for the price stated in the contract for such construction project or operation or in any modification of such contract constitutes a cause for disciplinary action."
We neither find nor are directed to any judicial support for the inclusion of a breach of warranty within the terms of either section 7107 or 7113. Looking through the scant number of cases involving these sections since their enactment as part of the Business and Professions Code (Stats.1939, ch. 37), there are no cases upholding breach of warranty as a grounds for discipline under either section. Furthermore, Despite this dearth, the Attorney General argues that it is ascertainable from the language of the disciplinary statutes themselves that a contractor must honor its warranties on pain of penalties. This requires a fluidity of meaning in the plain words of the statutes which we cannot sanction. For instance, in section 7107, the Attorney General claims it is too "narrow" an interpretation of the phrase "abandonment ... of any construction project or operation" to restrict it to an abandonment of the actual installation of the contracted work. Instead, he claims, the statute should be construed to mean that an abandonment could occur at any point during the life of the construction contract, whether that abandonment occurs before work is undertaken, while the work is going on, or as long after the work is completed as there is a contractual obligation still in effect. The main problem with this fanciful construction of section 7107 is that it is not grounded in the language of the statute. If the Legislature had intended that the breach of contractual warranty by a licensee would constitute grounds for discipline it could have easily said so in plain language. There is no reason why we should impart to the phrase "construction project or operation" any meaning other than that which an ordinary person would give those words, which is to say as meaning the actual work contracted to be done by the licensee. As we noted in County of Sacramento v. Pacific Gas and Elec. Co. (1987) 193 Cal.App.3d 300, at page 308, 238 Cal.Rptr. 305, the meaning of a statute must be sought in the first instance in the language by which it is framed and if that is plain, it must be enforced according to its terms. Consequently, "courts should give effect to statutes 'according to the usual, ordinary import of the language employed in framing them.' " (Merrill v. Department of Motor Vehicles (1969) 71 Cal.2d 907, 918, 80 Cal.Rptr. 89, 458 P.2d 33; citation omitted.) Under the plain meaning of the statute, once the work is completed and accepted, it is no longer a "construction project or operation" within the meaning of section 7107 and hence cannot be thereafter be subject to an "abandonment." In short, a completed construction project cannot be abandoned.
None of these cases even hint that a breach of warranty for a completed project constitutes grounds for discipline under either section. For illustrative purposes, we briefly recount those cases. Mickelson Concrete Co. v. Contractors' State License Bd. (1979) 95 Cal.App.3d 631, 157 Cal.Rptr. 96, held that section 7109 [willful departure from industry standards] and section 7113 were violated by improperly constructing and repairing a concrete slab. Bailey-Sperber, Inc. v. Yosemite Ins. Co. (1976) 64 Cal.App.3d 725, 134 Cal.Rptr. 740, found violations of sections 7107 and 7113 when the accused subcontractor never undertook the work, thereby forcing the primary contractor to rebid at a seriously detrimental price. In Hemphill v. Contractors' State License Bd. (1959) 167 Cal.App.2d 340, 334 P.2d 287, the contractor was accused of skimming funds. Athough both section 7113 and section 7116 (the statute prohibiting fraud) were originally charged, the accusation was sustained and case appealed only with respect to fraud under section 7116. Beach v. Contractors' State License Board (1957) 151 Cal.App.2d 117, 311 P.2d 51, found that sections 7107 and 7113 were violated where the accused builder double charged for work already paid for as condition of his completion of the home and when he eventually walked off the project. In Terminix Co. v. Contractor's State etc. Bd. (1948) 84 Cal.App.2d 167, 190 P.2d 24, although section 7113 was invoked for failure of the company to honor a salesman's warrant that the restucco job would be as good as and as cheap as a professional restuccoer, the case turned on the absence of injury or prejudice to the owner. Finally, in Karz v. Department of P. & V. Standards (1936) 11 Cal.App.2d 554, 54 P.2d 35, the predecessor statute [Stats.1933, ch. 573, § 9, subds. (1), (7) ] was found to be violated where a builder walked away from the underlying contract when the owners breached a contract to pay for extras.
The Attorney General relies in vain upon Bailey-Sperber, Inc. v. Yosemite Ins. Co., supra, 64 Cal.App.3d 725, 134 Cal.Rptr. 740, in support of his position that under section 7107 a "construction project or operation" continues in existence so long as there are outstanding contractual obligations. There the court held that a licensee abandoned the contract within the meaning of section 7107 even though he never began performance. The court rejected the licensee's contention that there could not be an abandonment of a contract unless the contractor had actually begun operations and then ceased them. Nothing in that case supports the Attorney General's contention. Obviously, if one has a contractual obligation to perform work, one can abandon the work before it is begun, but by no parity of reasoning can this possibly be said once the work is completed.
With respect to the plain meaning of section 7113, we see no reason why "construction project or operation" should In the first place--as we have just noted with section 7107--the project is completed when the actual work is finished, not when all potential contractual obligations have run. As for the notion a breach of warranty adds to the contract price because the buyer must spend additional money, we think that contention is rebutted by the nature of a warranty. Ordinarily, a buyer always agrees to pay for defect-free work (unless purchasing something with a known defect). The warranty is an additional contractual term by which the seller guarantees the quality of what he is selling, presumably for enhanced compensation or to induce the sale. (See 2 Witkin, Summary of Cal.Law (8th ed. 1973) Sales, § 48, p. 1128.) A breach of the warranty, like any other breach of a covenant in a contract, gives rise to damages on the part of the buyer because he will have to make repairs which the seller covenanted to assume. But this is a remedy independent of the contract, as in the context of a sale of goods where a buyer may sue for breach of warranty without rescinding the underlying contract. (See Reininger v. Eldon Mfg. Co. (1952) 114 Cal.App.2d 240, 243, 250 P.2d 4; 2 Witkin, op. cit. supra, Sales, § 180, p. 1219.) Thus, where a contractor completes the work for the contracted price and later breaches a warranty, this does not increase the contract price for the work but instead gives rise to an action for damages, an entirely separate matter. The plain purpose of the statute is to protect the consumer from unscrupulous contractors who seek to exact additional sums from buyers after construction has begun by refusing to undertake any further work unless the buyers pony up additional money. If the statute were intended to be a general remedy against any breach of a contractual term causing a buyer to expend additional sums, it would have been simple enough for the Legislature to say so.
Here, as was the case with section 7107, the Attorney General's reliance upon Bailey-Sperber, supra, is misplaced since a failure to initiate work is but a subset of failure to complete work for the contract price. Our decision in Mickelson Concrete Co. v. Contractors' State License Bd. (1979) 95 Cal.App.3d 631, 157 Cal.Rptr. 96, upon which he also relies, is distinguishable. Primarily, Mickelson involves discipline under section 7109 for the inadequate repair of a defective slab of concrete with a pour over. That section provides that the wilful and prejudicial departure from accepted trade standards in workmanlike construction constitutes a ground for disciplinary action. We upheld the finding that the repair in question was done in such an inadequate way that it indicated a purposeful departure from accepted trade standards and hence could fairly be characterized as willful. We also held that the contractor violated section 7113 when, after agreeing to repair the concrete slab for a specified price, he then performed unacceptable work and failed to take appropriate corrective action after being repeatedly requested to do so. ( Id., at p. 635, 157 Cal.Rptr. 96.) Implicit in our decision was the conclusion that the repair work, which left the slab in worse condition, was so defective that the work could not be deemed completed at any point in time. This should be distinguished from the present situation where the flaw in the liner was one common to the industry and where no problems arose with the pool for a matter of years. Here the claim, unlike that in Mickelson, is not that the work was so defective that the project was never This leaves the Attorney General's argument the amendment of section 7091 by the Legislature in 1980 supports an interpretation of sections 7107 and 7113 as including breaches of warranties within their ambit. Section 7091 sets forth the time limitations for filing accusations and the amendment in question provides that "[a]ccusations regarding an alleged breach of an express, written warranty for a period in excess of three years issued by the contractor shall be filed within the duration of that warranty." This argument must be rejected because the Legislature cannot create grounds for discipline by providing a statute of limitations for an otherwise nonexistent punitive statute. This would be akin to claiming a misdemeanor crime of distributing noncommercially grown zucchini could be created by the amendment of Penal Code section 802 to provide a statute of limitations for such an act. A statute of limitations presupposes some remedy (in the civil context) or substantive right to prosecute (in the criminal context) already exists; to say that language in a limitations statute creates some inchoate right of the state to prosecute which does not otherwise appear in the substantive sections of the code would be to violate the principles of notice required by due process which we have previously recounted.
As amended in 1980, Section 7091 provided in relevant part: "All accusations against licensees shall be filed within three years after the act or omission alleged as the ground for disciplinary action, except that with respect to an accusation alleging a violation of Section 7112, the accusation may be filed within two years after the discovery by the registrar or by the board of the alleged facts constituting the fraud or misrepresentation prohibited by the section. Accusations regarding an alleged breach of an express, written warranty [for a period in excess of three years] issued by the contractor shall be filed within the duration of that warranty. The proceedings under this article shall be conducted in accordance with the provisions of Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code, and the registrar shall have all the powers granted therein." (Stats.1980, ch. 865, § 1, pp. 2699-2700.)
It may well be that it would be in the public interest to include the breach of an express warranty among the grounds for disciplinary action. But the public policy question must be addressed to the arbiter of that policy, the Legislature. We hold only that the cited disciplinary statutes, strictly construed, cannot fairly be read to include such a ground.
The judgment is reversed and the cause is remanded to the trial court with directions to issue a new and different judgment granting the relief requested by Viking Pools.
CARR, Acting P.J., and DEEGAN, J. , concur.
Assigned by the Chief Justice.
All further statutory references, unless otherwise indicated, are to the Business and Professions Code.